Trains, not pipelines, channel new oil boom

2013-08-02T00:00:00Z Trains, not pipelines, channel new oil boomCurtis Tate Mcclatchy Washington Bureau Arizona Daily Star
August 02, 2013 12:00 am  • 

DELAWARE CITY, Del. - Who needs a pipeline when you have a railroad?

While Republicans in Congress accuse President Obama of killing American jobs by delaying a decision on the controversial Keystone XL pipeline, the Delaware City refinery, 100 miles northeast of Washington, never needed it.

No pipeline runs from the booming Bakken oil-producing region of North Dakota to Delaware City. No pipeline stretches to the Tesoro refinery at Anacortes, Wash. Rather, existing pipelines generally run north-south, not east-west. But railroads lead to Delaware City and Anacortes, and practically everywhere else in the country.

Until last month's deadly derailment of a crude-oil train in Quebec, pipelines dominated the debate about moving oil. But rail shipments of North American crude oil already have matched what Keystone XL was proposed to carry, and more is on the way. What started as a stopgap has become the go-to for transporting crude.

"A big part of the popularity of rail is that the president can't veto it," said Eric Smith, associate director of the Tulane University Energy Institute.

Environmental and community groups may find that they have less power to stop a train than to stall a pipeline. Pipelines can take years to approve and can only move a product from point A to point B. Rail cars, by contrast, can be deployed quickly and can go almost anywhere. Oil producers and refiners turned to rail because they didn't have enough pipelines. They discovered they liked it.

"They always thought of pipelines," said Philip Verleger, an energy economist and a visiting fellow at the Peterson Institute for International Economics, a Washington think tank. "Once they demonstrated it can be done (by rail), they said, 'Oh, why didn't we think of it?'"

In March, 71 percent of North Dakota crude moved by rail vs. 20 percent by pipeline, according to state data. The rail shipments, and new hydraulic fracturing technology, have helped North Dakota overtake Alaska as the nation's No. 2 oil producer. Texas is No. 1.

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